First in a letter to ITMedia Solutions LLC (“IT Media”) the FTC takes issue with practices related to claims on its SBA.com website (what a domain BTW!). Here’s the text of the letter:

[You] may be unlawfully misleading small business consumers about federal loans or other temporary small business relief in violation of the Federal Trade Commission (“FTC Act”). 15 U.S.C. § 45.

As you know, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) is intended to provide emergency relief to individuals, families, and businesses under severe financial strain amid the novel coronavirus outbreak (COVID-19). The Act offers vital assistance to small businesses struggling to keep their workforces employed, by creating a new Section 7(a) loan program: the Paycheck Protection Program (“PPP”). Small businesses may apply for PPP loans through U.S. Small Business Administration (“SBA”)-authorized lenders or other lenders SBA has determined to be eligible.FTC staff has reviewed IT Media’s advertising and marketing, including sba.com, as recently as May 8, 2020. This website has included the following claims:

Using the name sba.com, the website prominently has touted “Your Paycheck Protection Program Loan starts here” and has solicited consumers to “Get Started” with their PPP loan applications; and

Consumers who have scrolled further down have been told that sba.com “connect[s] you to our large nationwide network/marketplace of approved PPP (Paycheck Protection Program) lenders.”

These and other claims on the website suggest, among other things, an affiliation or relationship with the SBA and approved PPP lenders and that consumers can get PPP loans by applying on these sites. To the extent that any of these claims are not truthful, omit material information needed to prevent the claims from misleading consumers, or are not substantiated, they would violate Section 5 of the FTC Act, 15 U.S.C. § 45, which prohibits “unfair or deceptive acts or practices in or affecting commerce.” Under Section 5, it is unlawful to make representations that are likely to deceive consumers, including small businesses. This includes express or implied representations, whether made directly or indirectly.

IT Media should take immediate action, including by reviewing and monitoring all advertising and marketing used by, or on behalf of, IT Media in any form (including websites, social media, emails, telemarketing, and text messages), to ensure all deceptive claims are removed. You also should act immediately to remediate any harm to small business consumers stemming from such claims. This letter is not meant to contain an exhaustive list of possible violations related to your products or operations.Please notify us within 48 hours of the support IT Media has for the types of claims described above and specific actions IT Media has taken to address the FTC’s concerns by emailing COVID19ResponseDFP@ftc.gov.

Perhaps the scariest part of the letter, though, is the end:

FTC investigators have copied and preserved your website and marketing materials and will continue monitoring your representations to evaluate whether further action is appropriate in connection with your activity.

Eesh. I just got the chills.

A second letter was sent to Lendio the same day and is very similarly worded:

This letter is to advise you that Lendio, Inc. (“Lendio”) and its lead generators may be unlawfully misleading small business consumers about federal loans or other temporary small business relief in violation of the Federal Trade Commission (“FTC Act”). 15 U.S.C. § 45.

As you know, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) is intended to provide emergency relief to individuals, families, and businesses under severe financial strain amid the novel coronavirus outbreak (COVID-19). The Act offers vital assistance to small businesses struggling to keep their workforces employed, by creating a new Section 7(a) loan program: the Paycheck Protection Program (“PPP”). Small businesses may apply for PPP loans through U.S. Small Business Administration (“SBA”)-authorized lenders or other lenders SBA has determined to be eligible.FTC staff has reviewed advertising and marketing by, or on behalf of, Lendio, including IT Media Solutions, LLC and the website sba.com, and Merchants Advance Network, Inc. and the website manfunding.com, as recently as May 8, 2020. These websites have included the following claims:

Using the name sba.com, the website prominently has touted “Your Paycheck Protection Program Loan starts here” and has solicited consumers to “Get Started” with their PPP loan applications;

Consumers who have scrolled further down have been told that sba.com “connect[s] you to our large nationwide network/marketplace of approved PPP (Paycheck Protection Program) lenders”; and

Merchants Advance Network has represented it is an authorized SBA loan packager who “only charge[s] a nominal fee of $495 per business” and “will work with you hand-in-hand to apply you for ALL eligible relief products that the SBA has to offer.” Its website, manfunding.com, encourages consumers to “Apply Now” and “Find a Participating Lender” for PPP loans.

These and other claims on these websites suggest, among other things, an affiliation or relationship with the SBA and approved PPP lenders and that consumers can get PPP loans by applying on these sites. In addition, agents, including lead generators and others providing PPP application assistance, are prohibited from charging fees to PPP loan applicants, either directly or by taking a fee out of the loan proceeds.

To the extent that any of these claims are not truthful, omit material information needed to prevent the claims from misleading consumers, or are not substantiated, they would violate Section 5 of the FTC Act, 15 U.S.C. § 45, which prohibits “unfair or deceptive acts or practices in or affecting commerce.” Under Section 5, it is unlawful to make representations that are likely to deceive consumers, including small businesses. This includes express or implied representations, whether made directly or indirectly.

Lendio should take immediate action, including by reviewing and monitoring all advertising and marketing used by, or on behalf of, Lendio in any form (including websites, social media, emails, telemarketing, and text messages), to ensure all deceptive claims are removed. You also should act immediately to remediate any harm to small business consumers stemming from such claims. This letter is not meant to contain an exhaustive list of possible violations related to your products or operations.

Now look–I’m not saying these folks have done anything wrong (although the regulators seem convinced) but I do know you have to be ultra-careful these days. As I have reported in recent webinars, the FTC and the FCC both are hyper-focused on protecting consumers from COVID-related scams or misinformation. Anything that even smells askew related to public-facing PPP or SBA information following CARES is going to trigger review and scrutiny from the folks in D.C.

Tread carefully TCPAWorld.

Editor’s Note: For those of you who want more information on FTC activity around lead buying our old pal Queenie–the great and powerful Puja Amin–will be speaking on a panel at virtual Lead Generation World covering the subject on Wednesday May 27, 2020. I’m not on the panel for some reason–what’s up with that Mike?– but Puja was one of my most talented litigators and has gone on to a great career with loanDepot. She brings a depth of knowledge from both an outside and in-house litigator perspective. What a resource! If you have questions after the event feel free to give me a call.

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Published by Eric J. Troutman

The Czar of TCPAWorld
Eric Troutman is one of the country’s prominent class action defense lawyers and is nationally recognized in Telephone Consumer Protection Act (TCPA) litigation and compliance.
He has served as lead defense counsel in more than 70 national TCPA class actions and has litigated nearly a thousand individual TCPA cases in his role as national strategic litigation counsel for major banks and finance companies. He also helps industry participants build TCPA-compliant processes, policies, and systems.
Eric has built a national litigation practice based upon deep experience, rigorous analysis and extraordinary responsiveness. Eric and his team feel equally at home litigating multibillion dollar telecommunications class actions in federal court as they do developing and executing national litigation strategies for institutions facing an onslaught of individual TCPA matters. They thrive in each of these roles – delivering consistently excellent results – while never losing sight of the client experience.
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In his spare time, Eric leads defense teams representing banks and other financial services companies in consumer finance litigation matters. He has experience representing clients in UCC, TILA, RESPA FCRA, CCRA, CLRA, FDCPA, RFDCPA and FCCPA claims, as well as in fraud and bank operations issues.
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